Aug. 2 (Bloomberg) -- Romania’s central bank left its
benchmark interest rate unchanged for a third consecutive
meeting as political turmoil that sank the leu to a record low
outweighed concern about a deepening recession.

The Banca Nationala a Romaniei kept its monetary policy at
a record-low 5.25 percent today, according to an e-mail from the
bank. Today’s decision matched the estimates of all 12
economists surveyed by Bloomberg News.

“Heightened risk aversion, against the background of an
unfavorable external environment and of possibly persistent
domestic political tensions, calls for further maintaining a
prudent monetary-policy stance,” the central bank said in a
statement.

Political wrangling between the president and the prime
minister, which led to a presidential impeachment vote last
week, weakened the leu 3.5 percent against the euro in July,
preventing the central bank from moving ahead with rate cuts
needed to help pull the economy out of a second recession in
three years.

The leu, the world’s second-worst performing currency in
July after the Sudanese pound, declined as much as 0.5 percent
to 4.6318 per euro and was trading at 4.6250 at 6:26 p.m. in
Bucharest after the Constitutional Court postponed ruling on
whether the impeachment referendum was valid until Sept. 12.

Debt Crisis

As Europe’s debt crisis threatens to throw the 17-nation
economy into a recession, central and eastern European central
banks are cutting rates or weighing the merits of policy easing
on their export-driven economies.

Romanian inflation, which had slowed to a record low by
May, accelerated for the first time in eight months June and
will probably end 2012 at 3.2 percent because of an unfavorable
statistical base effect on food prices, the central bank
forecast in May. Slowing price growth, fueled by weak domestic
demand and a bumper harvest in 2011, enabled policy makers to
lower the main rate four times before pausing in May and June.

Inflation will probably accelerate in the third quarter,
even as it remains within the bank’s target range of 2 percent
to 4 percent this year and next, Governor Mugur Isarescu told
reporters at a briefing today.

The central bank “again opted for prudence due to a
potential increase in inflation to 3.7 percent in December from
2 percent in June, external pressures on the leu and domestic
political jitters,” Eugen Sinca, a Bucharest-based analyst at
Banca Comerciala Romana SA, said in an e-mail after the rate
announcement.

Reserve Demands

Romania’s central bank today also kept its minimum reserve
requirements on foreign-exchange deposits at 20 percent and the
ratio for leu deposits at 15 percent. It will probably leave the
main interest rate on hold this year, the median estimate of
seven economists in a Bloomberg survey shows, as the row
continues between President Traian Basescu and Premier Victor
Ponta’s coalition before elections in November or December.

Neighboring Hungary has also kept its rate unchanged for
seven months amid stalled aid talks with the International
Monetary Fund and the European Union and a worsening inflation
outlook. It may cut the rate by the end of this year as the
economy slides into recession. The Czech Republic held its main
rate today after lowering it in June for the first time in two
years to combat an economic slump.

Romania fell into a recession in the first quarter as
government spending cuts hampered consumption and freezing
weather curbed exports. Gross domestic product growth will
probably slow to 1.5 percent this year compared with 2.5 percent
in 2011, according to IMF and EU forecasts.

The GDP forecast may be lowered to below 1.5 percent this
year as “sufficient data,” including lower agricultural
output, point to a further slowdown, Isarescu said.